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California Establishes Product Liability Program for Marijuana Dispensaries

May 17, 2018

Selling products to consumers always comes with a certain amount of risk as at any point the manufacturer could issue a recall leaving the retailers with significant losses in profit. However, licensed California marijuana dispensaries will now be eligible to enroll in a product liability program to protect them from product recalls.

Product Liability Program

Yesterday, California Insurance Commissioner Dave Jones announced that he approved a new product liability and recall program for cannabis retailers across the state. The new policy will be offered by Continental Heritage Insurance Company and will provide coverage to on claims that involve product recalls.

In the event that a cannabis infused product sold from your dispensary were to harm a customer in any way, having an insurance policy to mitigate your liability could save your business. Currently these policies are available to licensed cannabis retailers, cultivators, manufacturers, and distributors.

Mitigate Dispensary Recalls

An integral part of operating in a legal marijuana market is maintaining compliance with California cannabis regulations and consistently selling safe products. The new product liability program will remove the risk from licensed dispensaries while monitoring changes in the ever evolving marijuana industry.

Commissioner Jones stated, “Whenever anyone shops in, works in, sells products to, or invests in a cannabis business, I want there to be insurance coverage available.” The initial goal was to fill in gaps in the cannabis industry so Jones began encouraging commercial insurance companies to create policies that would establish protections.

Protecting Cannabis Businesses

Considering the amount of manufacturing companies that are investing in new product development, it’s extremely smart for marijuana businesses to have safe guards in place. One tainted ingredient in a batch of edibles or faulty vape battery could devastate a cannabis company or retailer.

The only business license that the product liability program will not cover is that of testing laboratories as they are responsible for ensuring the quality and safety of each product. All marijuana dispensaries should consider applying for this type of insurance as protecting your business investment is a top priority.